PARIS, Jan 14 (Reuters) – Additional global electricity demand over the next three years could result in market volatility and high emissions unless there are faster structural changes, the International Energy Agency said in a report on Friday.
Global electricity demand rose 1,500 terawatt hours (TWh) in 2021, up 6% year-on-year, the largest percent gain since the global financial crisis recovery in 2010 and the largest total rise on record, the report said.
China accounted for about half of the global increase with a 10% rise year-on-year.
Demand is expected to increase by 2.7% on average from 2022 to 2024, though COVID-19 and high energy prices could disrupt demand growth, the report said.
Carbon dioxide emissions also climbed to record high in 2021, up 7% year on year after falling the previous two years, and are set to remain around the same level over the next three years, it said.
The surge in consumption combined with a shortage in natural gas and coal caused volatile power prices, demand destruction and negative effects on power generators, retailers and end users in China, Europe and India, the IEA said.
The IEA’s price index for major wholesale electricity markets in 2021 nearly doubled compared to 2020, up 64% from the average over 2016 to 2020. In Europe, fourth quarter 2021 prices were over four times the 2015 to 2020 average.
Japan and India similarly saw a strong uptick in power prices, while those in the United States were more mild as gas supplies were less disturbed.
“Sharp spikes in electricity prices in recent times have been causing hardship for many households and businesses around the world and risk becoming a driver of social and political tensions,” said IEA Executive Director Fatih Birol.
Higher investments in low-carbon technology, renewables, nuclear, energy efficiency and the expansion of electricity grids were marked as solutions.
Coal-fired generation rose 9% in 2021, accounting for more than half the demand increase and reaching a record high as surging gas prices made the fuel source more competitive, the report said.
Power supply from renewables increased 6% in 2021 while gas-fired generation and nuclear added 2% and 3.5% respectively, it said.
Renewables are expected to grow 8% year on year through 2024, and account for over 90% of total demand growth over the same period, the report said.
Power from fossil fuels is seen flat, with coal falling slightly and gas generation up 1% on average.
(Reporting by Forrest Crellin Editing by Alistair Bell)